Core Viewpoint - The report from First Shanghai gives a "buy" rating for Cloud Factory (02512), with a target price of HKD 6.9, indicating a 36% upside potential from the current price, driven by the company's strategic positioning in new business areas and alignment with government policies on "Artificial Intelligence+" [1] Financial Performance - In H1 2025, the group's total revenue reached HKD 406.8 million, a year-on-year increase of 10.0%, primarily due to regular business expansion and significant growth in edge computing services [1] - Gross profit was HKD 47.7 million, with an overall gross margin of 11.7%, while net profit stood at HKD 14.9 million, reflecting a year-on-year growth of 19.0% [1] - The earnings per share for ordinary equity holders remained at HKD 0.03, and as of June 30, the group had cash and cash equivalents of HKD 348.1 million, indicating strong liquidity reserves [1] IDC Solutions Growth - The revenue from IDC solutions services in H1 2025 reached HKD 376.1 million, a year-on-year increase of 7.9%, accounting for 92.5% of total revenue [2] - The growth in revenue was attributed to the company's strong reputation, stable customer base, and extensive business network, despite a decrease in gross margin to 10.2% due to competitive pricing strategies [2] Edge Computing Services - Revenue from edge computing services grew to HKD 29.2 million, a year-on-year increase of 39.0%, representing 7.2% of total revenue, driven by increased market demand for EdgeCDN services and new customer acquisition [3] - The gross margin for this segment was 27.1%, and the company has been recognized as one of the top 20 edge computing companies in China for three consecutive years [3] Strategic Development - The company focuses on four strategic areas: expanding smart computing services, enhancing technology research and development, strengthening ecosystem partnerships, and building a dual-driven model for government and enterprise solutions [4] - Recent capital raised from new share subscriptions will be used for various business developments, including the establishment of a joint venture to explore the smart computing services market [4]

Investment Rating - The report maintains a "Recommended" rating for the company [1][5][6] Core Views - The company is expected to see marginal improvement in performance due to accelerated IDC (Internet Data Center) production, with a projected revenue increase from 7,281.21 million yuan in 2024 to 9,219.53 million yuan in 2027, reflecting a growth rate of 8.47% in 2027 [1][5] - The company's net profit is forecasted to recover from 335.53 million yuan in 2025 to 479.65 million yuan in 2027, with a significant growth rate of 23.16% in 2027 [1][5] - The report highlights the company's strong IDC resource reserves and the increasing demand for high-power, high-density IDC driven by AI development [5][6] Financial Projections - Revenue projections for the company are as follows: - 2024: 7,281.21 million yuan - 2025: 7,754.55 million yuan - 2026: 8,499.82 million yuan - 2027: 9,219.53 million yuan - The expected growth rates for revenue are -7.31% in 2024, 6.50% in 2025, 9.61% in 2026, and 8.47% in 2027 [1][5][8] - Net profit projections are: - 2024: 381.44 million yuan - 2025: 335.53 million yuan - 2026: 389.46 million yuan - 2027: 479.65 million yuan - The growth rates for net profit are -1.68% in 2024, -12.04% in 2025, 16.07% in 2026, and 23.16% in 2027 [1][5][8] Operational Highlights - The company has achieved a significant scale in IDC, exceeding 4,000P, with ongoing projects in Tianjin, Shanghai, and Beijing [5][6] - The company has implemented various energy-saving measures and increased the use of renewable energy, completing green electricity transactions of approximately 200 million kWh, which reduced carbon emissions by nearly 130,000 tons [5][6] - The company plans to continue expanding its IDC resources, with over 230,000 cabinets planned nationwide, and has already deployed 72,000 cabinets [5][6]

Core Viewpoint - The company, Beijing Capital Online Technology Co., Ltd., is implementing a restricted stock incentive plan aimed at enhancing employee motivation and retaining key talent, particularly in a competitive industry environment [4][6][19]. Group 1: Incentive Plan Overview - The restricted stock incentive plan will be managed by the company's Board of Directors' Compensation and Assessment Committee, focusing on the company's actual situation and policy environment in China [3][4]. - The total number of restricted stocks to be granted under this plan does not exceed 3 million shares, accounting for approximately 0.60% of the company's total share capital [7][8]. Group 2: Target Recipients and Allocation - The incentive plan targets directors, senior management, and core technical (business) personnel within the company and its subsidiaries [4][5]. - The initial grant will not include independent directors or shareholders holding more than 5% of the company's shares [5][6]. Group 3: Grant and Vesting Conditions - The vesting of restricted stocks is contingent upon the company meeting specific performance targets, including revenue growth rates of at least 23.20% for 2025 and 41.68% for 2026, based on 2023 figures [17][18]. - The grant price for the restricted stocks is set at 10.98 yuan per share, which is aligned with regulatory requirements [18][23]. Group 4: Compliance and Feasibility - The independent financial advisor confirms that the incentive plan complies with relevant laws and regulations, ensuring that it does not harm the interests of the company and its shareholders [19][21][24]. - The plan includes provisions for adjusting the number of granted stocks in case of corporate actions such as stock splits or dividends [8][9]. Group 5: Financial Implications - The implementation of the incentive plan is expected to have a positive impact on the company's ongoing operational capacity and shareholder equity, as the interests of the incentive recipients will align with those of the shareholders [26].